Made in Britain is still a hallmark of quality and in demand worldwide. With trade concerns arising from the US-China tensions, worries about the Chinese economy, and (dare I say it?) Brexit, savvy businesses are exploring the opportunities available to export to new markets, forge new trading relationships and deepen existing ones.
Opportunities from Brexit?
UK International Trade Secretary, Liam Fox, reiterated the positive message that 2018 was a successful year for UK trade, and there is confidence in continued success for the year ahead – and beyond:
“2018 has been a year to celebrate our successes in trade – with record highs in investment and exports,” he said. “In a year where we launched our Export Strategy, our GDP continues to grow at a quicker rate than the Eurozone, and employment is at a rate we haven’t seen for more than 40 years.”
“With exports reaching £626 billion we look forward to 2019. Overseas trade will continue to play a crucial part in economic growth and my international economic department will do all it can to support UK businesses to expand their operations overseas.”
Ian Wright, Chief Executive of the Food & Drink Federation,
- Global demand going up
International demand for UK goods and services is still growing, rising to £626 billion by end October 2018. There has been considerable interest in British products from the fastest growing countries in the World, with particular interest from The Association of Southeast Asian Nations (ASEAN) economies. The ten ASEAN Member States – Indonesia, Thailand, Singapore, Malaysia, the Philippines, Myanmar (Burma), Cambodia, Brunei, Laos and Vietnam – have shown a growing interest in British goods, with exports to the region growing by 10.4% to the end of the second quarter of 2018.
highlighted these opportunities for food and drink businesses at the Department for International Trade (DIT) mini export accelerator event, hosted at law firm Irwin Mitchell
in December 2018: “Brexit or not, progress on these relationships will continue in 2019 and there are planned programmes to encourage collaboration and cooperation for Spring 2019.”
- Wider horizons
Exporters from the UK are broadening their horizons – over the past ten years, there has been a shift from more than half of the UK’s exports going to the EU, to over 50% now winging their way to non-EU destinations.
- Economic growth
UK Gross Domestic Product (GDP) growth for Quarter 3 of 2018 eclipsed figures from the Eurozone, growing to 0.6% from 0.2%. The economy has grown by 17.8% in the past eight years.
- The “Special Relationship”
The US is still the top destination for UK exports, with UK exports across the Pond rising to £114 billion to the third quarter of 2018.
- The rise of The Northern Powerhouse
The Northern Powerhouse – made up of the core cities of Manchester, Liverpool, Sheffield, Newcastle, Leeds and Hull – increased exports by over 2% to Quarter 3 2018.
- Midlands Matters
Exports of goods from the Midlands grew by a healthy 6% in the same period
Laurence Gavin, Partner at law firm, Irwin Mitchell, comments: “At this stage, it’s important you keep your options as open as possible. While the economic picture is currently strong, the final shape of the UK’s trading options is still very unclear and it’s worth planning for a range of eventualities. It’s also a good time to be busy. Explore as many export channels as possible and, if possible, make relationships with trading partners outside of the EU.”
Challenges for Food and Drink businesses
While we do not yet know what the final Brexit deal (or no deal) will bring, Irwin Mitchell provided some food for thought on potential challenges from Brexit for food and drink companies.
No more free, cross-border trade
Without knowing what customs regulations could be enforced on trading with the EU, businesses are anticipating increased costs and there will likely be hurdles to overcome regarding UK trade and investment.
Food and agribusiness
Losing the Common Agriculture Policy (CAP) and any trade restrictions imposed will have implications for production and revenue for food and agribusiness companies.
David Johnson, Founding Director at Halo Financial, spoke to food and drink businesses at the seminar about effective risk management in these times of economic and political uncertainty:
“There’s no escaping the fact that foreign exchange is a volatile market, which is why it can be such a significant risk to the business: but getting to grips with it is essential for good governance in international businesses.
“With the right tools in place, you can use currency volatility to your advantage, and mitigate the risks.”
Get in touch with a Halo Financial Currency Consultant today to see how we can help your food and drink business plan for both the challenges and opportunities of Brexit.